Asset price comparison models
Student’s name
Institution
Date
Asset price comparison models
Asset pricing across the modern market involves different approaches that enhances the depiction of the relevant value ascribed to a certain capital asset in comparison to other competing assets in the market. Capital asset pricing models depicts the relationship between systematic risks and the expected rate of return associated with a certain capital asset in the market. Therefore comparing the effectiveness of different asset pricing models is a critical procedure that would enhance the identification of the most relevant asset pricing model and enhance implementation of the model in the price depiction of the similar assets in the market. Moreover, estimation of the influential risks associated with different rates of return of particular capital asset influences conclusive decision making process that would influence profitability of an investment strategy. Therefore, this paper will conduct a credible research via mathematical models such as correlation studies, statistical arbitrage, hedging techniques, and Arch prediction models to compare their significances in reflecting the possible returns that would be realized from the different capital assets and eventually influence better investment decision making.
Background study
The capital asset pricing comparison study will be based on the previously published literatures on the effectiveness of different pricing models and utilize the data obtained to develop a credible research that will offer insight on the most effective methods to employ while pricing the capital assets in the current market. Since the modern market is associated with rapid market changes that affects the stock value and pricing through investigating the relevant aspects that affect pricing of capital assets this paper will avail reliable conclusion on the how pricing models affects the valuation and returns realized from the assets. Studies conducted on different financial modeling approaches that have been used to estimate the capital assets prices across the globe will be referred while coming up with the current paper.
Research question
- What are the significances of the different asset price comparison models?
- What is the most effective asset price comparison model?
- How could the identified asset price comparison model influence investment decision-making.
Objectives of the study
- To determine the significances of the different asset price comparison models.
- To establish the most effective asset price comparison model?
- To establish how the identified asset price comparison model influence investment decision-making.
Research methodology
The current study will be based on secondary sources of information which will offer the most credible capital asset price estimation models used in past instances and their significances to come up with reliable literatures. Moreover, the research will conduct mathematical computations on selected asset prices across the Hong Kong, New York stock exchange and London stock exchange to determine the significances of each pricing model on the investments decisions. Correlation studies, statistical arbitrage, hedging techniques, and arch prediction models will be used as the key price comparison model across the current paper and eventually offer reliable information on the significances of the approaches on the determination of asset value and related investor’s decision.
